Brian owns 200 shares of Bell Corp. stock purchased in January 2017 for $2,400. On January 30,
Question:
Brian owns 200 shares of Bell Corp. stock purchased in January 2017 for $2,400. On January 30, 2019, he receives 200 taxable stock rights valued at $5 with the right to purchase additional shares at $25.
a. How much income does Brian have?
What is the basis in the rights? When does the holding period oft he rights begin?
b. On February 20, 2020, Brian exercises 100 rights and sells the remaining 100 rights for $7 each. What is the basis of each new share? When does the holding period begin?
How much and what kind of gain does he have on the sale oft he rights?
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Related Book For 
CCH Federal Taxation Basic Principles 2020
ISBN: 9780808051787
2020 Edition
Authors: Ephraim P. Smith, Philip J. Harmelink, James R. Hasselback
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